The days of earning tens of thousands of dollars in a short space of time with real estate investments are long gone. However, that does not mean that you cannot earn cash. You just have to remember to set your sights a little lower when it comes to profitability. You also need to plan what is the best course of action for the property you invest in. On this page, we will look at three ways you can earn cash from a real estate investment. It is worth noting that there is no better option when it comes to making money for a property. As I mentioned before; you will have to choose the best option for your own personal circumstances.
Resale of the property
When most real estate people invest, this is the first option that comes to mind. The idea of this method is to do one of two things:
The first option is to ‘sit’ on the property for a while and wait for the market to go up a bit. This is not the most preferable method because obviously you will not generate cash in the meantime and it will take a while for the market to climb to the point where you want to earn some cash after all fees have been paid. Serious real estate investors will not go down this path. If you don’t want to make improvements to your property and you want to go down this path, I suggest you opt to rent your property for a while.
The second option, and perhaps one of the most fun, is the idea of buying a property and then renovating it a bit. You will be surprised how much a property’s value will increase with just a couple of small changes. The wonderful thing about this option is that properties that are not in the best condition are actually quite cheap, as very few people want to buy a property that requires a lot of work. However, the downside to this method is that you will have to go to great lengths to minimize renovation costs to maximize profits. This means that you will probably have to do the vast majority of renovation work on your own. That being said, if you can do things right, you can make thousands of dollars of profit in just a few short months.
Reselling a property is ONLY ideal for those who want to get a cash back as soon as possible. The vast majority of people will steer clear of property renovations simply because they are not always guaranteed to make a profit on the sale. After all, the sale price of your property depends on the whim of the current real estate market. For instance; If the housing market falls while you are renovating your home or commercial property, then you are going to take a loss and this will obviously not be ideal.
This method is the most preferred by most real estate investors. This is because, if done correctly, you will be able to generate a significant amount of cash each month with almost no effort (more on this soon). The problem is that you are not going to make money as fast as you would from the sale of the property, but many people make a fairly stable income simply by renting properties.
As I mentioned earlier, the main benefit of renting a property is the fact that you will earn money every month. If the property price is correct, much of this cash will be a profit (that is, anything after the mortgage and any other fees that need to be paid). The downside is that if your property isn’t currently rented, and it won’t be renting all the time, then you’re not going to make any money. This means that you have to act. The vast majority of investors will contact a property management group that will take care of all of that for them. However, you should be aware that the administration fee will often be quite high and will really affect your earnings.
Remember, if you want to start renting properties, you must be aware of the various laws that currently exist in the country. Many of these can make being a first time homeowner quite difficult (and expensive), so do as much research as possible before diving into this option. This is undoubtedly one of the best ways you can make money from real estate investing, but it is probably one of the most difficult.
Real estate commercial activities
This is not the most popular option for real estate investment, as you will need to own a certain type of property for this to work. Basically, it will turn your investment property into a ‘money generator’. For instance; I could open a bed and breakfast or a hotel. You generally don’t invest in real estate to open any other business, as you are not looking to make money from real property, although you will if you go down that path.
You must realize that it is almost a full time job to go this real estate investment route as you will have a business to run and it will take a long time. Of course, you can get staff instead, but that will cost you a considerable amount of cash. This option is not recommended for “first time” investors, as it is very difficult to cash in.